Correlation Between Eclat Textile and Advantech

Can any of the company-specific risk be diversified away by investing in both Eclat Textile and Advantech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eclat Textile and Advantech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eclat Textile Co and Advantech Co, you can compare the effects of market volatilities on Eclat Textile and Advantech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eclat Textile with a short position of Advantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eclat Textile and Advantech.

Diversification Opportunities for Eclat Textile and Advantech

0.03

Correlation Coefficient

Eclat Textile  Advantech

Significant diversification

The 3 months correlation between Eclat and Advantech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eclat Textile Co and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Eclat Textile is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eclat Textile Co are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Eclat Textile i.e., Eclat Textile and Advantech go up and down completely randomly.

Pair Corralation between Eclat Textile and Advantech

Assuming the 90 days trading horizon Eclat Textile Co is expected to generate 1.08 times more return on investment than Advantech. However, Eclat Textile is 1.08 times more volatile than Advantech Co. It trades about 0.01 of its potential returns per unit of risk. Advantech Co is currently generating about -0.03 per unit of risk. If you would invest  53,200  in Eclat Textile Co on September 2, 2024 and sell it today you would lose (200.00) from holding Eclat Textile Co or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eclat Textile Co  vs.  Advantech Co

Eclat Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eclat Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eclat Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advantech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advantech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eclat Textile and Advantech

The main advantage of trading using opposite Eclat Textile and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eclat Textile position performs unexpectedly, Advantech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Advantech will offset losses from the drop in Advantech's long position.

The idea behind Eclat Textile Co and Advantech Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.